After more than a decade of sustained economic growth, the question of a recession is becoming increasingly hard to avoid. Not because economists are predicting that one is imminent, but simply because everyone keeps asking about it.
That was one of the big takeaways from the annual 2020 Economic Forecast Breakfast on Thursday at the Hilton Vancouver Washington. Multiple speakers insisted that current indicators don’t point toward a recession this year — but their focus on the topic highlighted an increasing anxiety about the possibility among the business community.
The keynote speaker, Vigor Industrial Board Vice Chairman and founding CEO Frank Foti, touched on a few common concerns he’s heard recently, including an economic slowdown in Europe overall and Germany in particular, continuing trade tensions with China, the impact of Brexit and, more locally, Boeing’s ongoing struggles to get its 737 Max jets back in the air.
Consumer confidence has slipped over the past few months, Foti noted, and the World Bank and International Monetary Fund are predicting slower growth in 2020, particularly among the world’s top four economies.
Still, all that doesn’t add up to an imminent recession, he said.
“Slow growth is still growth,” Foti said.
Much of his speech focused on Vigor itself, which was one of Vancouver’s most notable business newcomers last year — although, Foti noted, the company already had a small local facility. In February, the shipbuilding and maritime industrial company announced that it would significantly expand its Vancouver footprint by taking over the former Christensen Shipyards luxury-yacht manufacturing facility.
Vigor will use the shipyard to produce a 37-vessel order of new amphibious landing craft for the U.S. Army, along with smaller orders for other Army vessels and commercial passenger craft and work boats.
The size of the former Christensen facility will allow Vigor to consolidate all of its aluminum-boat building operations to Vancouver, Foti said, including some that were originally located in Seattle.
“The opportunity to bring our team together here was the primary driver,” he said.
Vigor is developing a prototype landing craft, Foti said, that will be followed by four more, based on refinements to the first one. Production of the other 32 is expected to kick off in 2023, he said, and the operation is expected to bring hundreds of jobs to the area once it’s fully scaled up.
Foti also discussed the struggle that Vigor and other manufacturing companies have faced to find the right skilled applicants, and the company’s efforts to work with local colleges to create new skill pipelines for students.
After the keynote, Foti joined Port of Portland Director Curtis Robinhold, Washington Department of Commerce Director Lisa Brown, and Cornell Clayton, director of the Thomas S. Foley Institute for Policy at Washington State University, for a panel discussion about 2020 trends moderated by Jennifer Baker, president of the Columbia River Economic Development Council.
Clayton focused on political trends including the global rise of populist leaders like President Donald Trump, tracing the trend to rising global wealth and income inequality, which he said lead to political anxiety and instability. Populism and political polarization are likely to continue until the underlying causes are addressed, he said.
“Income and wealth is more polarized than it’s been at any time since the 1920s,” he said.
Brown spoke on international trade, including Wednesday’s announcement of a preliminary trade deal with China. She said that deal is pulling the parties back from the brink of further-increasing tariffs, but she said it didn’t resolve the underlying tension.
“Trade is probably our biggest destabilizing international factor right now,” she said.
Robinhold agreed with Brown about the importance of trade, and similarly characterized the China deal as “mostly a detente.” Washington and Oregon are both heavily dependent on exports, he said, so the trade issues will continue to reverberate locally in the coming year.
The event concluded with a presentation from Scott Bailey, the regional economist for Southwest Washington. He began by addressing a question from Baker about how the latest minimum wage hike to $13.50 will impact businesses.
The answer? Not much, he said, because relatively few area employers are paying most of their employees the minimum wage to begin with. And even among those who are, he said, the change amounts to a small payroll expense increase. Using a fast food restaurant as an example, he said the increase would translate into about a five- to 10-cent increase in the price of a burger. But the impact can be much more noticeable for employees on the receiving end, he said.
“That last jump (to $13.50) is a big deal for a lot of people who are really struggling,” he said.
Bailey said Clark County’s unemployment rate is slightly higher than state and national averages, but that doesn’t mean the county is in a bad place — Clark County saw six years of strong employment growth up until 2018, when things tapered off a bit.
“We’re kind of right around that state and national average after being above it for several years,” he said.
Some of the county’s fastest-growing industries in recent years include health, government, food and lodging, construction, retail, finance and corporate offices. That last one is notable, Bailey said, because it points to a shift in the county’s job market away from what was once a much more substantially blue-collar workforce.
The flip side of all that growth has been a widening wage gap in Clark County, he said, with the growth rates of low- and high-wage jobs far outpacing the rate of middle-wage jobs. The county has a persistently large wage gap for workers of color, Bailey said, which will require a proactive response to solve.
“We have deep and profound racial issues in this country and in our communities, and we have to own that,” he said.
Bailey closed with a series of predictions for 2020 — starting with another reassurance that a recession isn’t on the horizon. Job growth and low unemployment rates are likely to continue locally, without any significant impact from the minimum-wage hike. Wages will likely rise, but so will income inequality, he said.
He closed with a message about climate change, which he called climate justice, urging the business leaders in the audience to think about how necessary changes on a wider scale will impact Clark County, especially changes to the transportation and shipping industries.